Coronavirus: Primark announces wage fund for garment workers

Primark has established a fund to cover the wages of garment workers, following criticism that it had cancelled orders worth millions of dollars due to coronavirus.

The retailer said it was “concerned” about the impact cancelling orders would have on workers in its garment supply chain.

Primark said it would help pay wages to garment workers relating to orders it is no longer accepting. The fund will support workers at factories in Bangladesh, Cambodia, India, Myanmar, Pakistan, Sri Lanka and Vietnam.

Its pledge comes after Primark faced criticism after it cancelled or suspended orders in Bangladesh worth approximately $273m.

The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) estimated over $3bn worth of garment exports have been cancelled or suspended as a result of Covid-19.

However, Primark has stipulated “adjustments for government support packages” provided in each country will be taken into account, causing confusion for suppliers and industry bodies.

Rubana Huq, chairperson of the BGMEA, told The Guardian: “While we welcome Primark’s announcement that they will compensate workers for the wages they will lose as a result of these cancelled orders, it is not clear enough what they mean.

“Wage compensation should not take government loans into consideration. These brands have existing business commitments with their suppliers that are their responsibility to honour.”

Separately, a report has warned the fashion industry is “particularly vulnerable” to an economic contraction as a result of the pandemic.

The report, authored by McKinsey, predicted the global fashion industry will contract by –27% to –30% in 2020 year-on-year.

According to the report: “This unforeseeable humanitarian and financial crisis has rendered previously planned strategies for 2020 redundant, leaving fashion businesses exposed or rudderless as their leaders confront a disorienting future and vulnerable workers face hardship and destitution.”

It warned the humanitarian repercussions were expected to outlast the pandemic itself, adding developing nations “will be hit the hardest”.

“For workers in low-cost sourcing and fashion-manufacturing hubs, such as Bangladesh, Cambodia, Ethiopia, Honduras, and India, extended periods of unemployment will mean hunger and disease,” it said.